Construction Materials Update

The general 12 month drop in construction commodity prices reﬂects the continuing impact of low oil prices on contract awards within the region.

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Ongoing liquidity issues and reprioritisation mean that contract awards are signifcantly down in the last year. There has been speculation that steel (reinforcement) which has risen sharply, may fall in the coming months as Chinese production continues to create over capacity. However, China has sought to dampen fears of steel dumping, stating their strong domestic consumption for 2017 will utilise most of the production.

Q1 prices have largely stabilised with no major swings in commodity pricing. As the KSA market comes back on-line, driven by differing funding models and the need for social infrastructure, the UAE market should start the road to recovery as contract awards for 2020 begin to add a positive slant (and tower cranes) to the skyline.

The removal of subsidies on petrol and diesel within the UAE has seen signifcant price increases in retail prices in the Emirates, but KSA has not made any further signifcant change since its major adjustment at the beginning of 2016.